We work with anywhere from 20-25 boards in a given year and when we talk about what keeps them up at night, the top of the list is always CEO retention and succession. Succession planning is really about mitigating risks of the leadership transition that every organization will go through at one time or another. It’s great when we know our CEO is planning to retire in 5 years, but we also have to plan for the unexpected.
As we are all well aware, the financial services landscape seems to be changing faster by the day, but a few things remain constant: we will continue to see increased merger activity; big credit unions are getting bigger and small credit unions are challenged for growth. Effective succession planning requires an organization to step up to the challenge of aligning timing of a CEO transition, strategic direction of an organization, and the experience and capability of its team.
The first step in developing your people is understanding where they are today so we can begin to focus development on where they need to be tomorrow. The objective and challenge of building talent from within requires discipline, and it requires you to start early and assess often. A succession plan isn’t the book on the shelf; it’s an ongoing disciplined process that requires top down buy in throughout your organization. Investing in your people should be a transparent process that is proactive and often requires flexibility and creativity so that you make the necessary course corrections to continue to meet and exceed the future demands of the organization.
Strategic succession planning is a direct reflection of effective board governance and will become an increasing pressure point from regulators. While organizations may still elect to consider external leadership when preparing for a CEO transition, developing internal candidates ready to fire on all cylinders must be a strategic priority for all organizations.